AUDITING
How to Audit During a Pandemic? Your Top 5 Questions Answered. Carl R. Mayes, Jr., CPA This year has been anything but conventional. As auditors prepare to audit clients who’ve found themselves financially affected by the pandemic, the AICPA has received many questions. To bring a little clarity in the time of COVID-19, here are answers to the most frequently asked questions.
1
IS IT POSSIBLE AND EFFECTIVE TO AUDIT REMOTELY?
You’re not prohibited from conducting audit procedures remotely. Auditing standards generally specify what evidence must be collected, but not how it must be collected. In most cases, we can reliably gather audit evidence remotely. To audit remotely, you must have the necessary infrastructure and resources in place — licenses for videoconferencing technology, staff training, security and privacy protocols, etc. While certain aspects of an audit, such as observing inventory counts, are harder to do without being physically present, there are a wealth of resources available for auditors to use when working remotely to assure you’re complying with the requirements of professional standards. Access the AICPA’s COVID-19: Audit & Assurance resources at wscpa.org/aicpa-audit.
2
HOW CAN I AUDIT PROPERTY, PLANT AND EQUIPMENT (PP&E) AND INVENTORY WHILE WORKING REMOTELY?
While your ability to perform in-person audit work may be limited, auditors are still required to test assertions that traditionally require them to be onsite, like PP&E and inventory existence. A possible solution to confirm the existence of PP&E and inventory is livestreaming. Using video that is confirmed to be live (as opposed to pre-recorded), management can put their fixed assets on camera so you can verify their existence. Regarding inventory existence, livestreaming is also a valid solution if COVID-19 has made being physically present for inventory counts impracticable. Another solution is to observe the inventory count on a different date and review and test the inventory roll-forward, assuming adequate controls exist over inventory. If the client has a perpetual inventory system, you can consider relying on the client's cycle counts. These counts are often conducted quarterly and include a portion of the client's inventory on hand. If you’ve been testing those controls and relying on them to establish the existence of inventory, you may be able to go back to the client’s last cycle count and roll forward to year end by testing sales and purchases during that interim period. If the client's inventory balance is material but they’re unable to
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The Washington CPA Winter 2021
www.wscpa.org
